Recent Legislation Impacts City Budget and Tax Rate Process

Two bills were recently passed that will affect a city’s budget adoption and property tax rate setting process:

S.B. 656 (Paxton/Button) requires that additional actions and notice be provided by the city when it adopts its budget. More specifically, the bill: (1) requires the city council’s vote to adopt a budget to be a record vote; (2) requires an adopted budget to contain a cover page that includes: (a) a specific statement on whether the budget raises more, less, or the same amount of property tax revenue compared to the previous year’s budget; (b) the record vote of each member of the governing body by name voting on the adoption of the budget; (c) the city property tax rates for the preceding and current fiscal years, including the adopted rate, effective tax rate, effective maintenance and operations tax rate, rollback tax rate, and debt rate; and (d) the total amount of city debt obligations secured by property taxes; (3) requires a city with a website to post the cover page in (2), above, on the city’s website, and keep the record vote information on the city’s website for at least one year after the budget is adopted; and (4) requires the city council to amend the cover page to include the property tax rate information for the current fiscal year if the rates are not included on the cover page when the budget is filed with the city secretary.

S.B. 656 is effective beginning September 1, 2013, and applies to a budget adopted for a fiscal year beginning on or after September 1, 2013. Therefore, cities will need to comply with the requirements of S.B. 656 beginning with the upcoming budget adoption process. The full text of the bill is available at:

S.B. 1510 (Hinojosa/Hilderbran) is a good bill for Texas cities and taxpayers alike. The bill will, for next year (i.e., 2014), simplify property tax rate setting process and notice requirements. The full text of the bill is available at:

Again, unlike S.B. 656, S.B. 1510 is not effective until January 1, 2014. Cities should not use its provisions until the tax rate setting process in 2014.

The League recently posted the 2013 Budget and Taxation Deadlines memos for large cities and small cities on the TML website at: http://www.tml.org/legal_topics-legal_finance. These memos account for the changes to the budget adoption process provided by S.B. 656.

TML member cities may use the material herein for any purpose. No other person or entity may reproduce, duplicate, or distribute any part of this document without the written authorization of the Texas Municipal League.